The dollar index (DXY00) on Monday rose by +0.02% after recovering from a 1-week low.  The dollar saw support from hawkish comments from Fed Governor Bowman, who said it’s too soon for the Fed to cut interest rates. 

On Monday, Fed Governor Bowman's comments were hawkish and bullish for the dollar when she said current interest rates are in a good place to keep downward pressure on inflation, and she doesn't see Fed rate cuts as appropriate "in the immediate future."

The markets are discounting the chances for a -25 bp rate cut at 19% for the March 19-20 FOMC meeting and at 73% for the following meeting on April 30-May 1.

EUR/USD (^EURUSD) on Monday fell by -0.09%.  The euro on Monday fell back from a 1-week high and moved slightly lower on dovish comments from ECB Governing Council member Panetta, who said the ECB will have to start cutting interest rates soon.

ECB Governing Council member Panetta said, "The time for reversal of the monetary policy stance of the ECB is fast approaching as macroeconomic conditions suggest that disinflation is at an advanced stage, and progress toward the ECB's 2% target continues to be rapid."

Swaps are pricing in the chances for a -25 bp rate cut by the ECB at 11% for its next meeting on March 7 and 60% for the following meeting on April 11.

USD/JPY (^USDJPY) on Monday rose by +0.04%.  On Monday, the yen gave up overnight gains and moved slightly lower.  Central bank divergence continues to weigh on the yen as the Fed, BOE, and ECB have already raised interest rates while the BOJ maintains negative interest rates. Monday's trading activity in the yen was muted, with Japanese markets closed for the National Foundation Day holiday. Lower T-note yields on Monday were supportive of the yen.

Swaps are pricing in the chances for a +10 bp rate increase by the BOJ at 32% for its next meeting on March 19 and 68% for the following meeting on April 26.

April gold (GCJ4) Monday closed -5.70 (-0.28%), and Mar silver (SIH24) closed +0.173 (+0.77%).  Precious metals on Monday settled mixed, with gold falling to a 2-week low and silver climbing to a 1-week high.  A stronger dollar on Monday undercut metals prices.  Also, long liquidation and position squaring ahead of Tuesday’s U.S Jan CPI report weighed on precious metals.

Lower global bond yields on Monday limited losses in precious metals prices.  Also, dovish comments from ECB Governing Council member Panetta sparked some buying of precious metals as a store of value when he said the ECB would have to start cutting interest rates soon.

• Dollar Slightly Lower on Strength in Stocks
• Stocks Gain on Fed-Friendly Inflation Report
• Dollar Gains on Hawkish Fed and Higher T-note Yields
• Higher Bond Yields Weigh on Stocks But Chip Stocks Provide Support